Wednesday, January 14, 2015
3:09 PM

By the time economists see the next recession it may be half-over. Heck, it might even be over (it's happened before).

Through thick and thin economists remain optimistic. Today, despite an easily predictable decline in retail sales, economists did not see the decline coming. Instead, Huge Miss in Retail Sales Seen as a Blip.

U.S. retail sales recorded their largest decline in 11 months in
December as demand fell almost across the board, tempering expectations
for a sharp acceleration in consumer spending in the fourth quarter.

Economists,
however, cautioned against reading too much into the surprise weakness,
noting that holiday spending made it difficult to smooth December data
for seasonal fluctuations.

"Faulty seasonal adjustments
from shifts in holiday spending patterns are probably more to blame for
the December decline," said Steve Blitz, chief economist at ITG in New
York. "Looking at the last three months, spending is not collapsing."

Bricklin
Dwyer, a senior economist at BNP Paribas in New York, said fewer
post-Black Friday shopping days in November than normal threw off the
so-called seasonal factor used to adjust the data, resulting in a lower
December sales number.

"For January 2015, this seasonal factor will boost sales by the largest factor since 2006," said Dwyer.

"This
combined with the fact that we have seen a massive boost to consumer's
wallets as a result of the rapid decline in gasoline prices, suggests
that January could be a big month that reverses much of the December
drop," he said.

In December, a so-called core sales
gauge that strips out automobiles, gasoline, building materials and food
services, fell 0.4 percent after a 0.6 percent rise in November.

Economists
had expected this metric, which corresponds most closely with the
consumer spending component of gross domestic product, to rise 0.4
percent last month.

While there easily could be a seasonal boost in January, what about autos? And what about declining wages?

More Blips

In December, Average hourly earnings for all employees unexpectedly declined 0.2%, $0.06 per hour in December vs. November. This was the largest month-to-month percentage drop since the data series began in 2006. (See Average Hourly Wages vs. CPI: Are You Ahead?)

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